I am delighted to have the opportunity to speak on the Motor Vehicle (Duties and Licences) Bill. I congratulate the Minister for the Environment, Heritage and Local Government, Deputy Gormley, on the initiative he is taking in bringing about changes to the VRT regulations for greener and more fuel-efficient cars. His initiative will, over time, bring about a considerable change in the attitude of the public towards energy efficient motoring and eventually will have a similar impact, but on a much larger scale, to the plastic bag levy introduced by his predecessor as Minister for the Environment, Heritage and Local Government a number of years ago. However, the proposed VRT changes contain a number of anomalies which I hope the Minister will consider before finalising his proposals.
My background is in the motor trade. My late father had a Fiat Lancia main dealership which we ran from 1974 to 1987. In 1981, after leaving school, I worked in the business for seven years. The late 1970s and early 1980s were a good time in the motor industry. However, the industry then suffered from the penal duties placed on motor vehicles. The only political march on which I went was the "axe the tax" campaign in 1981 when the motor industry began to kick back at the level of punitive tax applied to it.
In the mid-1980s and the late 1980s we saw sales of between 50,000 and 60,000 new cars every year. In recent times, we achieved those figures in the month of January alone. I have a number of concerns about the introduction of this Bill and I hope amendments will be made during its passage through the Houses.
My brother and other family members still work in the industry and I am aware of the impact this Bill will have on car sales. The first aspect I question is the timing of the scheme. It would be much better to introduce it on 1 January. The motor industry changed considerably due to the changes made to the number plate. Many people purchase their car based on the incoming year's plate. Decisions on car purchase are made between September and December. This year, January car sales figures increased by 3.9%. For the first two weeks of February, car sales decreased by 18.5% and major concern exists that people will hold off on the purchase of cars until 1 July. The industry is also concerned that people will further put off purchases until January 2009. This will have an impact on the revenue due to the Government.
The Minister's intention is to influence the future buying habits of Irish motorists. All cars registered after 1 July will be taxed under the new regime. However, an individual who bought a fuel efficient car before now or who buys one between now and 1 July will still be taxed under the old system. Effectively, we will penalise those who cared for the environment before the Government decided to reward people for it.
In contrast, someone who imports a used car from England and registers it after 1 July will be taxed under the new system. This means that the same make, model and year of car will be taxed at two separate rates depending on whether it was originally bought in Ireland or imported from England and registered in Ireland after 1 July 2008. For example, an individual who purchased a new Volkswagen Golf diesel car in Ireland in 2006 will pay annual road tax of €560. However, someone who imports the same car from England after 1 July will pay only €150 per annum.
Unfortunately, the people who will be penalised under this anomaly will be those Irish motorists who cared enough for the environment to buy a lower emissions car before the introduction of this new standard. Not only will these motorists pay a higher rate of road tax each year, but the value of their cars may fall considerably relative to the value of imported cars and new cars registered after 1 July. This is a poor way of recognising motorists who bought cars on an environmental basis before it became profitable to do so. I hope that over the coming years we can address this issue and find a way to level the pitch.
The benefit in kind scheme which exists at present is mileage based. This is not very green when one considers that people are encouraged to reach a certain mileage and if they do not reach it they drive around the countryside to do so. This needs attention and the matter should be addressed.
In my home town of New Ross, the first biodiesel plant in the country is due to open its doors in the coming months. The targets for the use of biodiesel are between 3.5% and 5%. However, we have an opportunity to increase this dramatically through the use of biodiesel by commercial road transport fleets. I know of a number of fleet users in the UK which work on a 50-50 scheme whereby 50% biodiesel and 50% diesel are used. It seems to work well and we have a major opportunity to gain a green advantage through exploring such a system.
How accurate are measurements of engine emissions? Are we dependent on information given to us by motor manufacturers or do we have a way of measuring them ourselves? My understanding from the industry is that not all the measurements are accurate as there are different ways of testing emission levels. This is an area that could be examined on remaining Stages.
A myth exists that the smaller engine is the more economic one. This may not always be the case. In my motor trade days, I was always puzzled when people went for the 1.4 litre car as opposed to the 1.6 litre. Due to the power-to-weight ratio, the 1.6 litre was always more fuel efficient. Explaining that to a customer was nigh on impossible. When comparing a 1.4 litre petrol car to its 1.9 litre diesel model, people would be in for a pleasant surprise in that the larger engine will have a greener lean burn.
Last October when I changed my car, I bought a diesel one for the first time. I had always been a petrol-head for many years. Like Jeremy Clarkson on "Top Gear", I dreaded diesel, believing tractors were the only vehicles that should run on it.
